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Take it or leave it: Government offers new water deal

MANILA, Philippines — Take it or leave it.

The government will take over Metro Manila’s water distribution services if the two largest water firms refuse to accept the terms of a new contract that will be offered to them, President Duterte said yesterday.

Answering questions from the media, Duterte said the government has finished a “draft contract” that will be given to the water concessionaires, “which we would like to be enforced instead of the old one, which we think is not good for the Filipino.”

“I have this draft,” he said. “It’s either you accept it or not. You do not accept it? Then there is no contract.”

Maynilad Water Services Inc. and Manila Water Co. Inc. serve a combined 16 million customers under 25-year concession deals signed in 1997, but President Duterte labeled the agreements “onerous and disadvantageous” to Filipinos.

“It’s either they accept with no guarantee that they will not be prosecuted, or if they do not accept it, then I will nationalize the water system and prosecute them for plunder or estafa on a large scale,” Duterte said as he stressed that the original contract was void from the start or ab initio.

The President, in December, ordered criminal charges filed against the two water companies, including their billionaire owners who, earlier that month, had won arbitration cases in Singapore against the government.

Following the 45th Cabinet meeting on Monday, the Office of the Solicitor General and the Department of Justice (DOJ) readied new contracts that would replace the existing ones which allegedly contained the onerous provisions in favor of Maynilad and Manila Water.

“The Chief Executive is giving the water concessionaires the option of accepting the new contracts, minus the onerous provisions, without any guarantee of not being criminally prosecuted together with those who conspired to craft the very onerous contracts,” presidential spokesman Salvador Panelo told a news conference yesterday.

Panelo did not identify who will be facing possible charges over what the Chief Executive branded as “void ab initio, or void from the very beginning, for violating the Constitution and the laws of the land.”

“Should Maynilad and Manila Water refuse to accept the new agreements, the President will order the cancellation of their present water contracts, order the nationalization of water services in their respective areas of operation and prosecute all those involved directly or indirectly in the arrangement that led to the present suffering of the Filipino people,” he said.

Asked if the move was arbitrary, Panelo maintained that the contracts were void from the start. He then challenged the firms to bring the matter to court if they wish.

As to the salient points of the new contracts, Panelo has yet to give details on the provisions removed or added.

“It will be shared when the time comes but all the onerous provisions are removed,” Panelo said.

Among the provisions that Duterte considered onerous are the corporate income tax, government payments for business losses as well as the lack of interference in fixing rates.

Both Maynilad and Manila Water have yet to comment on the decision as they maintained that they have yet to receive a copy of the new contracts.

Maynilad, on the other hand, said it will continue to cooperate with the government.

“We have yet to be provided a copy of the amended contract, but we wish to reassure the President of our continuing cooperation,” Maynilad president and CEO Ramoncito Fernandez said in a text message.

The Metropolitan Waterworks and Sewerage System (MWSS) is also unaware of the final version of the contract even though they had been consulted on its drafting.

MWSS administrator Emmanuel Salamat is mum on the suggestions they submitted to the DOJ and maintained that they will just wait for a copy of the final contract before they make any comment.

MWSS chairman Reynaldo Velasco and MWSS chief regulator Patrick Ty echoed the same view.

“We had our inputs but eventually it was the Cabinet (who decided on it),” Velasco told The STAR.

“We were consulted last time but as to final (version), we don’t know. They just consulted me and asked for my opinion then we just explained,” Ty told The STAR.

Ty refused to elaborate on the terms discussed.

Meanwhile, Panelo maintained they have yet to set a deadline as to when Maynilad and Manila Water would have to give their response to the new contracts.

He added that Duterte did not have a dialogue with those who drafted the contracts nor is he inclined to have a personal meeting with the two concessionaires.

“The terms would be very different form the previous one. Basically, here are the new contracts, accept it, if you do, then we no longer have a problem,” Panelo said.

He also gave assurance that there will be no new players that will come in if the two concessionaires refuse to accept the new contracts. Instead, the government will take over water distribution.

The MWSS acknowledged the cooperation shown by Maynilad and Manila Water by declaring that they would no longer collect or enforce the arbitral awards.

The water concessionaires also expressed willingness to renegotiate the inequitable provisions of the concession agreement, Salamat said.

“The MWSS and the concessionaires will exert all efforts to comply with the directive of the President to execute a new concession agreement after 2022, which is currently being reviewed by the justice department,” Salamat said.

He said the MWSS is not shutting its door on the water companies.

Salamat said the government is giving Maynilad and Manila Water the opportunity to agree to the new terms of the concession agreement to “remove the onerous provisions of the contract.”

Civil groups said that water should be free. However, water privatization in Metro Manila pushed through because the government failed to provide water services around-the-clock to the people, according to Foundation for Economic Freedom and Global Source Partners Philippine vice chairman Romeo Bernardo.

Sen. Imee Marcos urged the water concessionaires to accept the new contract as she reiterated that Filipinos have the right to have reliable, affordable water.

“I urge water concessionaires to study and accept the new contract. It is the Filipino people’s human right to have reliable, affordable water. Any commercial interests can only be secondary to that right,” said Marcos.

Sen. Christopher “Bong” Go yesterday reiterated that water is essential to life and “very basic to our existence” so the resource cannot be left to business corporations to decide.

“Their primary objective is to earn profit. I have nothing against private business per se. But I have everything against bad business practices,” he said in a statement.

“Having said these, even if they accept the new contracts, as a senator who also considers access to clean water as a public health issue, nothing should prevent the government from determining and bringing to justice those responsible for acts against the best interests of the Filipino people,” Go said.

The rage of the Chief Executive stemmed from the arbitral award in favor of Manila Water which required the state to pay the firm P7.4 billion in losses incurred from non-implementation of rate hikes.

This triggered Duterte to ask for a review of the concession deals and the removal of the onerous provisions. Despite Maynilad and Manila Water dropping the awards, the MWSS still proceeded with the cancellation of the extension of their concessions.

The MWSS Board revoked the resolution which approved and granted the 15-year extension of the contracts of the two concessionaires until 2037. It was issued during the Arroyo administration in 2009.

Revoking such resolution would mean the agreements will end by 2022, the original expiration date.



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